The Strategic Imperative of Recognized Leadership in the Travel and Tourism Industry

The need for leadership in the travel and tourism industry has never been more critical. As a society and industry, we are grappling with large scale global and regional challenges – climate change, over-crowding at tourism sites and the resulting strain on infrastructure and social and economic inequality in many destinations – that require a new type of leadership from truly progressive entities.

Most governments appear unwilling or unable to lead, especially National Tourism Organisations (NTOs) needing to follow agendas dictated by national governments. Civil society, while highly engaged on sustainability issues, typically does not have the scale or infrastructure to deliver the required change. And multilateral associations, including the UNWTO, seem to be beholden to the political whims of national members.
Despite low levels of consumer trust, all arrows point to more committed and effective leadership by travel and tourism businesses as one of the key engines to drive more sustainable and prosperous destinations. This is in the self-interest of global travel and tourism companies as well – a global company can’t be successful and profitable in a chaotic world.
The return on investment of progressive corporate leadership has, in many cases, been underwhelming.

Despite the promise of strong social and environmental performance to drive business value, i.e., enhanced reputation and brand equity, stronger policy influence, deeper travel consumer and shareholder loyalty, increased market share, and greater talent attraction/retention – all too often there have been obstacles between a travel and tourism company’s commitments and the promised benefits.

Twenty31 Consulting recognises that one of the fundamental obstacles to creating more value for the enterprise from its sustainability and CSR strategy is the limited understanding and appreciation a company’s customers (i.e., travel consumers) and stakeholders have of these commitments. Without stronger engagement and recognition of a company’s commitments, business value remains limited. The solution can be found in building and nurturing the concept of recognized leadership, pioneered by global reputation and sustainability experts, GlobeScan.

Why recognized leadership in the travel and tourism industry? It can be argued that the only type of leadership that is enduring and can stimulate positive change is one that is recognized. Recognized leadership delivers value to the business in multiple forms: it inspires industry stakeholders; it creates virtuous competition among competitors, and it turns trust deficits into surpluses – which in turn drive business from high-value travel consumers.
The simple but potent insight here is that in order to accrue the benefits of enlightened commitments, travel consumers, travel trade and industry stakeholders need to understand what you stand for as a business and how you are executing on your corporate purpose. Collectively and in general, travel and tourism companies have done a poor job engaging with their Recognised Leadershipemployees, travel consumers, suppliers, communities, investors and NGO partners in this area around a shared vision and benefits. This goes well beyond marketing and communications and way past PR (where unfortunately many travel and tourism CSR and sustainability programmes reside).

Recognized travel and tourism leadership requires the thoughtful alignment of a number of moving parts that includes strategic vision, integrated performance and communications/engagement. A PR or branding campaign is insufficient to deliver recognized leadership without it being tied deeply into business performance. Sustainability and CSR initiatives must be credible and measurable. Similarly, strong vision and performance is an insufficient approach if it lacks a way to connect with travel consumers, travel trade and stakeholders more deeply.

According to our research, travel and tourism companies such as Jetwing Hotels, Intrepid Travel, Soneva Resorts, and Taj Hotels Resorts and Palaces have taken a more holistic approach to vision, performance and engagement and are driving the agenda and increasing business value.

Our approach is to build recognized leadership strategies based upon a clear assessment of the business context and through primary research and internal and external stakeholder engagement. The challenge is to develop an integrated strategy that manages risks, optimizes opportunities and community contribution, as well as best captures the imaginations of travel consumers, travel trade and broader stakeholders – all this in ways that build positive recognition for the company, which closes the loop on business value and in turn leads to greater social impact as the company derives greater economic and social benefits.
The world is on the cusp of a new era of corporate engagement that will fulfil many of the promises of the business case for corporate sustainability. We have a better understanding of the challenges we face and the actions required to secure a better world. Recognized leadership can help progressive travel and tourism companies mobilize their capabilities for a brighter and more sustainable future. The Pacific Asia Travel Association (PATA) can also play a role given their unique role facilitating engagement between business and government.

Building Sri Lanka's World-Class Tourism Brand

Sri Lanka has an unrealized tourism competitive advantage.  There is momentum in international travel, slated to double to 2 billion travellers by 2031, and Sri Lanka is primed to take advantage of this, albeit more strategically. 

While arrivals to Sri Lanka have grown exponentially over the last five years and tourism investment especially in Colombo’s hotel sector has dramatically increased, the political environment has partly fostered a higher level of fluctuation at the national tourism organisations (i.e., the Sri Lanka Tourism Promotions Bureau and the Sri Lanka Tourism Development Authority). With ever changing priorities and varying plans it becomes difficult for the country to build on its tourism strengths and focus on new opportunities. 
Sri Lanka can position itself as a high yield, exotic and alluring destination.  While more mature destinations (i.e., Thailand and Bali, Indonesia) have invested in volume, can Sri Lanka be the destination of the discerning, culturally-curious and adventurous travellers, increasingly running out of choices for immersive and authentic experiences?

The answer lies in defining the right tourism brand for Sri Lanka.  Sri Lanka’s recent tourism identity was born out of a need to open doors and change travel consumer perceptions following the decades-long civil war.  The timing is right to build on that base and develop a re-invigorated brand position, recognising the shifting travel consumer landscape and embrace of disruption in the travel and tourism industry.  

With stable leadership in the tourism industry, both within government and in the private sector, Sri Lanka can realize its enormous tourism potential. Through research, consultation, evaluation of the competitive set and understanding the trends in global tourism, Sri Lanka’s tourism industry can thrive. 

The Buzz Around Canada's Tourism Industry.

At first glance, the common honey bee and tourism don’t have much in common. And no, I’m not thinking of a new super sub-niche segment of capturing those nine engaged and interested destination apiculturalists that would tax even the most robust of big data solutions.

While reading a segment on honey bees in the Globe and Mail on Saturday, September 26th, 2015 and an associated infographic called “The business of bees”, it struck me that we all get what we consider the primary business of honey bees, that is, to make honey. And Canada makes a lot of honey. About 82 million pounds of it annually retailing for over $200 million.  
But like the tourism industry, that output, honey, is only the top of the honeycomb. Why? Because while honey production is the tangible, primary benefit of working bees, the intangible impact those bees have on the pollination of crops is worth a whopping $2 billion per annum.  A full one-third of our plant-based foods are directly or indirectly dependent on bee pollination.

That indirect part is where the parallels lie to Canada’s tourism industry.  While Canada’s tourism industry’s primary function is to fill airline seats, hotel rooms, convention centres, attractions and experiences—the honey, its indirect impact on the rest of Canada’s economy is truly significant.  A study by Deloitte commissioned by Destination Canada in 2013, determined that for every 1% increase in international travel to Canada, exports rise by an additional $182 million over the following two years.

Why? Because those people and companies that invest in a place, that import products from a place, send their kids to be educated in a place or bring their much needed skills and intellect to a place, begins with a visit.   The more people who see Canada, the more favourable they will be to investment.
But the business of tourism in Canada has a mixed reputation.  It’s commonly referred to as an old school industry, hosting low paying jobs, where deals happen via drinks by the pool-side. Worse still, the belief is that tourism pales in comparison to the more high-profile industries such as high tech, with Canada’s other well-funded advocacy organizations keeping forestry, mineral extraction and other industries high on our government’s radar and investment programs.

Let’s be clear, tourism is Canada’s number one service export.  Overall it’s Canada’s seventh largest export and that’s only counting the “honey.”  An investment in tourism is an investment in Canada, its provinces and territories, cities and regions and actively contributes to economic, social and community development objectives.  

Think of that the next time you want to sweeten your tea or toast

Amazon's Unbalanced Scorecard.

This past few weeks has been a whirlwind of bad press for Amazon. While no one can dispute the impressive performance of the company as an innovator and disruptor of the retail model, that performance, it seems, has come at a price to the working conditions of its employees. And while this news seems to be news to Amazon's Chairman, CEO and Founder Jeff Bezos, it begins to sound a bit like the response from our Canadian Prime Minister's office who don't seem to read or recall reading important memos on subjects that can burnish their reputations.

Bezos has founded his company's growth on knowledge in the digital age. Profound knowledge of consumers' tastes and preferences in books and then everyday consumer items.  Amazon was big data before, well, there was a big data. The chances of Bezos not knowing about the work culture he himself created and sustained is a challenge to accept.   Placing emphasis on growth at all costs may have, in fact cost Amazon even greater growth opportunities.  A lesson we learned early on at Destination Canada was to focus on meaningfully engaging your team first alongside a focus on innovation and growth.

In early 2007 Destination Canada adopted the balanced scorecard methodology for strategy based organizations.  The Balanced Scorecard was a tool created by Robert Kaplan and David Norton in the 1990's which focused on the balancing act that leaders must play in achieving their overall organizational targets.  Its premise is that for strategy based organizations and those focused on growth, the corporation cannot neglect one aspect of growth in favour of another.  The balance of the balanced scorecard suggests nurturing a positive work environment, sustaining reasonable employee engagement scores, investing in training and education to create a culture of high engagement would support high levels of future performance.  Strategy focused organizations that adopt a balanced scorecard approach are as much incented on reaching these employee engagement goals as they are to reach sales objectives and release dates. 

When I was the CMO of Destination Canada, our team grappled with this idea. When we began to focus on employee engagement, our corporate scores improved, our marketing campaigns improved and our stakeholder relationships improved.  We began to exceed our balanced scorecard objectives across all categories including performance goals, return on investment and technological advancement.  

In 2014, we were audited by the Conference Board of Canada against 30 Canadian Crown Corporations and came 4th in overall effectiveness against mandate.  In 2013, Destination Canada was inducted into the Balanced Scorecard Hall of Fame.   While not taking our eye off delivering against the mandate of the organization, we were better able to serve that mandate through highly engaged employees.   

Chances are Bezos will learn from this challenge as he has from the mountain of challenges he has faced before in bringing Amazon to the top of the disruptive organization hierarchy. Balancing out his scorecard will be a great first step.

Embracing sustainability for competitive advantage.

Travel and tourism is inherently a human resources intensive business - hotels need staff to manage and cater to guests’ discrete needs, tour operators need guides and drivers to shuttle and chaperone travellers, airlines need pilots, flight attendants, ground staff and customer service reps. Yet the industry for decades has relied on cheap labour and focused limited resources in effective training and adequate retention. The industry can also be immensely destructive to natural environments whether it is mega cruise ships docking in pristine coastal environments, the extreme use of precious water resources in hotel operations or the overcrowding of UNESCO World Heritage Sites.

Increasingly, traveller expectations are rising for travel and tourism businesses to find ways to secure, replenish, and restore natural and social capital wherever they operate, and act in a more sustainable fashion. Travellers have begun to question how their dollars are being distributed to local communities, the effect of their presence in natural environments and whether fair wages are paid to hotel, tour operator and attraction staff. Some in the industry have noted and have put in place new policies and pushed for a change in practices.  Hotels encourage guests to reuse towels and turn off lights and many tour operators offer optional donations to carbon offset programs and local charitable foundations.  Largely speaking though, these efforts are limited in scope, not independently verified to measure impact and are not integrated within the total business.  On the government side, limited regulations and lax enforcement have led many non-governmental organisations and industry observers to label the travel and tourism industry’s sustainability efforts as ‘green washing’.

Exceptions do exist – there are a number of leaders who have embraced sustainability as a core tenant for their business and/or destination. These organisations and destinations deeply understand the role of travel and tourism in economic development and the importance of shared value. Sustainability, sustainable development, corporate social responsibility, philanthropy – there are many labels to describe business’ and governments’ role in society.

Organisations need to build the business case for sustainability, define how to integrate corporate social responsibility positioning within their brand framework and better define their communications to target aspirational travellers. Fundamentally, sustainability is about innovation and transformation. Those tourism organisations that embrace this transformation will in turn will lead the markets and create durable value for all society.

So, tourism is NOT the world’s biggest industry.

So it turns out tourism is NOT the world's biggest industry

"Stop saying it is" was the academic blogger, obviously frustrated by the lofty, hyperbolic statements made by those in our industry frustrated by the lack of attention to tourism at all levels of government.

It would seem that lofty, unsubstantiated statements like these are probably working in the opposite direction from what they intend to do.  So what if tourism is not the world's biggest industry?

Well it does turn out that tourism is a huge, mega, humungous industry and that's pretty big.  A recent study by Oxford Economics in 2013 points to tourism as a $2.2 trillion dollar industry.  And since we fail to grasp how much $2.2 trillion dollars is, we looked at comparisons to other industries which make the industry that is not the world's biggest pretty impressive indeed.

Tourism is actually double that of the auto industry. Think of all that space in the business sections of the newspapers dedicate to the rise and fall and rise again of auto manufacturing followed by editorial on government hand-outs and bail outs, jobs lost, jobs gained and jobs saved. Politicians standing in front of shuttered auto plants and cutting ribbons at new plants probably lured by promises of tax relief and other government incentives. Just try reading the business section of a newspaper and NOT read something about auto manufacturing and then think that our little industry, top corner one paragraph article on page 19 is DOUBLE that. 

As this study was published to support a WTTC (World Travel and Tourism Congress) annual meeting in Japan, arguably a post WW II economy recovery on the backs of Toyotas, Hondas and Mazdas found that tourism, in Japan alone is almost 3/4 the size of auto manufacturing and creates 80% more jobs. And Japan is not even in the top 10 of the world’s most travelled to destinations.  How helpful tourism must be to support "Abenomics" in pulling Japan out of the doldrums of the last 15 years.  And tourism demand remains lofty.

Tourism is 2.8% of the world's GDP.  After the education sector, it’s the top job creator--50 jobs for each $1M US spent and the economic spread and trickle down of tourism exceeds many, many other industries.

Tourism may not be the world's biggest industry, but it’s the top job creator, employer of youth, top service export and significant contributor to the elimination of poverty and ultimately the world's best spreader of global cultural understanding.  It took one thousand years for international tourism to grow to one billion travellers in 2012.  It will take less than 20 years for that to double by 2031.  Governments at all levels who ignore the power of tourism, do so at their peril. 

Championing signature tourism experiences.

Most tourism destinations are run like democracies.  Many are either government run (National Tourism Organizations) or membership based organisations and reflect the relatively egalitarian needs and wants of the members or constituents.  Unfortunately, this can also sometimes mean that the squeaky wheel gets the grease.  Some vocal members can sway a strategy in their favour at the expense of the overall health of a destination. Worse, the democratic approach to marketing and advertising a destination that has so much to see and do, that it leaves the destination itself with no clear position in the competitive marketplace, no unique—‘available here and only here’ kind of position.  Often, even if that destination does has unique experiences, the destination board or management don’t necessarily showcase the experiences in the interest of being perceived to be fair and un-biased.  

And yet, destinations are simply a composite of the experiences, hotels and attractions that make up that destination which leverage these assets to their best ability to compete in this ferociously competitive business.  While it’s a lovely sentiment to manage a destination like a democracy, the fact is that all experiences will thrive if a destination puts its best foot forward.

We call this Boulders, Rocks and Pebbles. 

Boulders are the key attributes of a destination. Those that are unique, aligned with a destination’s brand, iconic, and differentiating. They may be the reason for the visit or the choice of a destination.   Boulders can be physical assets such as a UNESCO World Heritage site and/or an emotionally-grounded authentic experience, such as the powerful feeling one gets viewing the Liwa desert for the first time.

Rocks are those complementary experiences. They play second fiddle to the Boulders but they round out an experience, enhance that experience or destination.  While they may not be the reason for the destination choice, they may sway the vote in favour of that destination.  Rocks are not necessarily unique or differentiating, however, they play an important role in destination choice.

Pebbles are an important part of the visitor experience. They play a supporting role. You’ll never likely find pebbles in tourism advertising. Most pebbles are available everywhere and some don’t even know they are in the tourism business, but play an important part of rounding out a visitor’s experience and in filling in the gaps between the visits to the boulders and rocks.   Pebbles are particularly important as visitors increasingly seek authentic and local experiences when they visit a destination – think that café in an obscure side street in Barcelona with a mouth-watering croissant. 

The challenge with some destinations is that the prioritisation of boulders, rocks and pebbles are mixed up or worse, all found on the same page. 

Destinations need to effectively define their boulders, rocks and pebbles and importantly help their partners and industry understand the important role each plays in both positioning the destination for competitive advantage and in servicing that visitor when they do come.

Answering the ‘Why’ of travel.

The tourism industry—one of the world’s fastest growing industries, slated to double by 2031, is remarkably poorly understood.  Unlike other market industries, which have segmented their service offerings, carved out niches and competitive positions, tourism has been poorly defined.  The tourism industry is lumped together whether we’re referring to all inclusive travel in the Caribbean, a cruise in the Mediterranean or a trek in the Gobi desert.

The challenge, however is that there is a vast space that separates each of these experiences, not to mention the customer segments that best appeals to each of these experiences.  Yet each is treated as one industry in marketing and channel executions.  Interestingly, most demographic segmentation—age, income and education and the like, relied upon for decades across all marketing provide us very few clues as to the kind of traveller that might pursue one of those travel experiences over the other.

And most importantly, demographics provide us no information on WHY a traveller might pursue one travel experience over another.   It turns out, the ‘Why’ of travel is most important.  The pursuit of learning, bragging rights, cultural immersion, or total relaxation are very different notions and appeal to different kinds of travellers.  Figuring out how your destination or experience answers the why of travel will help define your best customer and from there your marketing strategy to compel and inspire a traveller or tourist to choose your destination or experience. Imagine trying to reach a free spirit in pursuit of enlightenment on a generic coach tour and you’ll get the picture.

Travellers and tourists are not the same. Tourists want nothing in their experience left to chance whose motivation for travel is getting away from routine, while travellers seek authenticity and discovery all on their own and often use travel not so much as a getaway but as an enlightening jolt in their lives. Neither types of travellers are better or worse, but those destinations and experiences that will thrive in the future will have to understand both, and which kind of tourism offers the greatest opportunity and then eventually, how to position and market their destination to reflect this opportunity.